OBAMA WILL DEAL IF BOEHNER ASKS: But POTUS might not trade a single thing for debt ceiling (the only leverage Rs thought they had) -- Steve Kerrigan, Dave Cusack head inaugural

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MORNING MINDREAD: A “Behind the Curtain” extra, by Mike Allen and Jim VandeHei:

--WHAT SPEAKER BOEHNER would like to tell President Obama: You gotta give me something to work with here. My leadership knows they’re going to have to eat it – it’s just a question of how and when. But I need something to push off of if I’m going to sell my rank-and-file guys on higher top rates: BIG concessions on entitlements and spending cuts. I see now that I probably shouldn’t have drawn such a red line on rates. But I can't move, and don't want to move, from my position on taxes unless you move on entitlements and spending. $800 billion in revenue is ALREADY a compromise. House budget equals zero, you want $1.6 trillion. 800 is in the middle, and it's all the Senate can pass. I would need a very specific plan for next year, with real triggers to force entitlement and spending cuts. If we’re going to bite it on rates, you’re going to have to bite it on spending.

As many as 80 percent of my guys are worried about being primaried if they cave too soon. And very few of them are worried about winning their generals, so the incentive is to resist. That’s why I’m increasingly pessimistic about getting this done by Christmas. We’re on track for December 28ish, because it can’t look like I’m caving preemptively or precipitously.

You KILLED me with that Geithner thing – REALLY got my guys’ backs up. My guys wanted to pull out of the talks after the saw it. The “offer” was a joke, and you know it. Going out on the campaign trail isn’t helping, either. Another huge problem that’s dragging this out, Mr. President: I can’t be totally frank, because I’m afraid it would leak. If I signaled flexibility on rates at this point and it got out, I’d be in big internal political trouble. I’d just have to deny it. I can’t have the whole conservative movement against me. And it wouldn’t go anywhere, but Tom Price might challenge me for Speaker. I know: It’s crazy! But welcome to my life.

--WHAT PRESIDENT OBAMA would like to tell Speaker Boehner: If you want concessions, you need to man up and ask for ’em, which you haven’t done. I want to do something big and I am willing compromise, but I have real leverage and I am not giving away the store. There is an easy deal here, but you have to give on rates and stop painting yourself into corners to get through the news cycle. When you are in a hole, stop digging. We know you need something to move on rates, so you have to say what it is. I won't negotiate with myself. Rates are going up one way or the other, so let's do this the easy way.

And don't think for one second the debt ceiling is worth anything, because I won't trade a single thing for it. Trying to play August all over again wouldn't be your dumbest move to date -- business will leave you in a second. You have to lead your caucus out of this mess and I want to help you. You just have to be willing to be helped. And don’t be greedy, or particularly optimistic: Your team lost. We ran on these issues and won. Welcome to MY life.

--WHAT BOEHNER THINKS but won’t tell Obama: We can’t ultimately be against a middle-class tax cut that Dems are for. We get it! But nothing for debt ceiling? You can't play hardball twice and win. The second debate will sting a lot if you just walk with rates on the first. Either that, or you’re comfortable with walking to the edge of the abyss.

--WHAT OBAMA THINKS but won’t tell Boehner: Your win can be a cut in entitlements, but you don’t consider that a win because you know Republicans can't boast they cut Medicare.

--WHAT LEADER McCONNELL would like to tell POTUS: You may win rates, but you won't win rates and get a debt ceiling for free. That's the overreach you may well want to take inventory of before you get too far out over your skis, sir. You can negotiate it all. But you can't force rates and then think you're going to get what you want on debt ceiling. If rates are off the table in the context of the debt ceiling, then revenue is no longer the price of admission.

--WHAT CEOs ARE TELLING BOTH: Are you guys nuts? The country is on the verge of an economic turnaround, provided you throw together a sane deal before Christmas. If so, the future is bright. Blow this, regardless of who is right or wrong, and you’re both in for a terrible ride for the next two years. That inaugural celebration and State of the Union will be quite a drag with markets sinking. So get ’er done.

--PLAYBOOK FACTS OF LIFE: The debt ceiling thing is spin – the President will give something. He doesn’t think Boehner is stupid enough to trip up our debt rating again. But he knows his party is, and that scares him.

--THE FINE PRINT: This is informed speculation, based on conversations with the few people who actually know. But these are not actual quotes. (Yet.)

TODAY is FDR’s “date which will live in infamy” -- N.Y. Times, Dec. 8, 1941: “JAPAN WARS ON U.S. AND BRITAIN; HEAVY FIGHTING AT SEA REPORTED.” See the front page (including the Honolulu-datelined, “Tokyo Bombers Strike Hard At Our Main Bases on Oahu,” By The United Press.) http://bit.ly/VrV4yg

BREAKING – “Payrolls in U.S. Rose in November, Jobless Rate Fell,” by Bloomberg’s Shobhana Chandra: “The unemployment rate fell to 7.7 percent, the lowest since December 2008, as size of the labor force shrank. … The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6 percent, from the prior month's 63.8 percent.”

TOP TALKER – “Obama aide Axelrod loses mustache on TV for charity” – AFP: “David Axelrod [had] his trademark mustache [shaved] … live on [‘Morning Joe’] after raising $1 million for epilepsy research. ‘We're cutting it off because there are people who have lost a lot more than a mustache to epilepsy,’ said Axelrod … [The ‘Today’ show dipped in live.] Axelrod, 57, who has had a mustache for 40 years, was saved [when Joe and Mika] stepped aside and let a professional barber with a straight razor do the job.

“One of the first donations … came from … Donald Trump … ‘We agree this is a good cause,’ Trump said in a phone call to the show. Other donors included actors George Clooney, Tom Hanks and millionaire and basketball team owner Mark Cuban. … The money goes to the Citizens United for Research in Epilepsy (CURE).” Axelrod’s wife, Susan, is the founding chair. Donate here.www.SlashTheStache.com

NEW BABY IN BOEHNERLAND – Kevin Smith emails friends: “Whitaker Wisehart Smith arrived two weeks early [on Wednesday evening], weighing in at six pounds and 11 ounces, while 20 inches long and with a full head of strawberry blonde hair. Kara and I are very excited he is here. Whit and mom are resting comfortably, and we hope to be home very soon. Thanks for all the prayers and good wishes.”

--Dad is hanging out with baby Whit, discussing baseball's winter meetings, and not the fiscal cliff.

INSIDE THE TALKS :

– N.Y. Times A24, “Participants in Talks on a Budget Deal Shrink to Two: Obama and Boehner,” by Jonathan Weisman and Peter Baker: “At House Speaker John A. Boehner’s request, Senate leaders and Representative Nancy Pelosi have been excluded from talks to avert a fiscal crisis, leaving it to Mr. Boehner and President Obama alone to find a deal … The exclusion of Senators Reid and McConnell and Ms. Pelosi … is a departure from last year’s search for a major deficit deal. … This time, while Mr. Boehner has made himself the sole focal point, aides say he has made sure a broad leadership team is behind him. He meets every morning while the House is in session with the full slate of Republican leaders, as well as the committee chairmen who would most likely implement a deal: Representative Paul D. Ryan of Wisconsin, who heads the Budget Committee; Representative Dave Camp of Michigan, who leads the Ways and Means Committee; and Representative Fred Upton of Michigan, who heads the Energy and Commerce Committee.

“White House officials have begun daily conference calls with the communications staffs of Mr. Reid and Ms. Pelosi. The White House communications director, Dan Pfeiffer, met with the Senate Democratic Caucus last week, and the director of the National Economic Council, Gene Sperling, spoke with the House Democrats late last month.” http://nyti.ms/QMzlEw

FLASHBACK, “It’s the Obama-Boehner show,” by Jim VandeHei and Mike Allen, Nov. 29: “It’s the Obama-Boehner show … Any deal will ultimately be hammered out between the two men, whose on-again, off-again relationship is stronger than most people realize.”

--“W.H. to House GOP: We're not moving,” by Jake Sherman and John Bresnahan and Carrie Budoff Brown: “If Wednesday’s phone call between Speaker John Boehner and President Barack Obama seemed like a hopeful sign in the fiscal cliff standoff, think again. On Thursday, with the House out of session, White House congressional liaison Rob Nabors trekked to Capitol Hill and delivered a firm message: We aren’t moving. In a meeting with leadership staff, Nabors reiterated the administration’s hard line that tax rates on top earners must go up, according to Republican sources with knowledge of the meeting. The White House is also insisting that Congress give it power to raise the debt limit on its own. …

“The administration has delivered this message publicly, but saying it to Republicans in private as well doesn’t bode well for the talks. … House Republican leadership staffers have privately discussed … the idea of passing two tax bills: one to extend all rates, even for families making above $250,000 annually; and a second to extend just middle-class income rates, along with a patch to the Medicare reimbursement rate and alternative minimum tax. Both would pass the House, the thinking goes, but only the Democrat-favored one helping the bottom 98 percent of earners would make it through the Senate.” http://politi.co/TGSDZ5

57TH INAUGURAL -- “2013 Presidential Inaugural Committee Launches, Announces Preliminary Schedule of Events for Inaugural Weekend and Inauguration Co-Chairs” – PIC release: “The … weekend will kick off with a National Day of Service … [O]n Saturday, January 19th, to honor our shared values and celebrate the legacy of Dr. Martin Luther King, Jr. President Obama, First Lady Michelle Obama, Vice President Biden, Dr. Jill Biden and members of the President’s Cabinet will participate in service projects in the Washington, DC area. In keeping with tradition for Inauguration Days that fall on a Sunday, the President will participate in a small private swearing-in ceremony on January 20. The President’s public swearing-in, the parade and the official Inaugural balls will take place on Monday, January 21. …

“The co-chairs for the 2013 Presidential Inaugural Committee are: Ambassador Matthew Barzun, National Finance Chair of President Obama’s reelection campaign and former Ambassador to Sweden … Eva Longoria, Actress, Obama for America Campaign Co-Chair and Founder of the Eva Longoria Foundation … Jane Stetson, National Finance Chair of the Democratic National Committee … Frank White, former member of the National Advisory Council on Minority Business Enterprises. …

“PIC announced the following positions: Jim Messina, Chair, Inaugural Parade … Stephanie Cutter, Chair, PIC Board of Directors … Jen O’Malley Dillon, Chair, National Day of Service … Julianna Smoot, Chair, Inaugural Balls and Receptions … Rufus Gifford, Chair, PIC Finance … Patrick Gaspard, Chair, National Mall. The staff for the 57th Presidential Inauguration will be led by Stephen J. Kerrigan, who will serve as Chief Executive Officer, and David J. Cusack, who will serve as Executive Director. … More information on the 2013 Presidential Inaugural Committee can be found at www.2013pic.org and on Twitter @obamainaugural.”

--BRENT COLBURN, communications director of the Obama campaign, will be PIC comms director. Addie Whisenant is National Spokesperson and Rachel Racusen is Deputy Communications Director. Both were in Chicago.

--Anna Palmer and Donovan Slack: “Organizers have also released the official theme ‘Faith in America’s Future,’ an attempt to draw a line toward the country’s steadfastness and unity. There are also expected to be several nods to Martin Luther King Jr., as the inaugural address will fall on the holiday commemorating the civil rights leader.

--“Metro: Obama 2013 inauguration projected to be 50 percent smaller,” by Byron Tau: “[T]he agency expects between 500,000 and 800,000 attendees to use the rail and bus system on the day of Obama's swearing-in for his second term. … That's down significantly from the record-shattering 1.5 million riders the agency carried into downtown Washington D.C. in 2009. The District of Columbia estimated that 1.8 million people attended the 2009 swearing-in.”

** A message from the Business Roundtable: With the fiscal cliff, uncertainty grows. Washington must avert the fiscal cliff so business can have the confidence to invest, hire and drive innovation. Business Roundtable CEOs have a message for Washington: It’s time to act now to avert the fiscal cliff. Hear directly from America’s CEOs at www.brt.org/itstimetoact **

OUT AN ABOUT: The Entertainment Software Association kicked off Washington’s party season last night with its Video Gamers Holiday Reception at the hip Rock & Roll Hotel, on H Street NE. Hundreds of partygoers jammed into the club’s three levels to mingle and play games like Ubisoft’s Just Dance 4 and Assassin’s Creed III. K Streeters, Capitol Hill aides, reporters, and tech executives showed off smooth, bipartisan moves to "Call Me Maybe" and "Gangnam Style.”

--“AFSCME, SEIU and NEA Continue Major Campaign to Protect Medicare, Medicaid and Education: Second Round of TV Ads to Launch Leading Up To National Day of Action December 10th with Nationwide Events Planned … [T]elevision ads in Virginia, Missouri, Ohio and Montana launched today.” YouTube of generic version of adhttp://bit.ly/YJbslK

--“More than 60 Percent of Leading Money Managers See the Dow Dipping 10 Percent or More If Washington Goes Over the ‘Fiscal Cliff’ … Potomac Research Group Poll Also Shows Majority of Institutional Investors Expect a Deal … The poll of hedge fund, pension fund and money market managers found that 56 percent foresee a deal to avoid the fiscal cliff by year end and 44 percent predict failure in the on-going negotiations. If an accord isn’t reached, 61 percent of the institutional investors surveyed predicted that the Dow Jones Industrial Average will decline by 10 percent or more. … The poll was emailed to a thousand of PRG’s clients and had a 6.2 percent response rate.” http://bit.ly/VOBpef

WHAT THE WEST WING IS READING – “Ann Coulter Says GOP Should Give In To Obama On Taxes: 'We Lost The Election’” – HuffPost: “Ann Coulter shocked Sean Hannity … when she conceded that she thinks Republicans should let tax rates for the rich go up. … Hannity wondered why the House didn't just pass a bill extending the Bush tax cuts for everyone. ‘OK fine, let's do that, but in the end, at some point, if the Bush tax cuts are repealed and everyone's taxes go up, I promise you Republicans will get blamed for it,’ she said. ‘It doesn't mean you cave on everything, but there are some things Republicans do that feed into what the media is telling America about Republicans.’ … ‘You're saying capitulate to Obama?’ Hannity stammered. … ‘We lost the election, Sean!’ Coulter replied.” Videohttp://huff.to/YUcla6

FINAL TALLY – Obama, Romney each topped $1 billion in 2012 -- Kenneth P. Vogel, Dave Levinthal and Tarini Parti: “Obama: $1.123 billion vs. Romney: $1.019 billion. That’s the final fundraising tally in the most expensive presidential election ever, according to reports filed Thursday with the Federal Election Commission by the rival campaigns and party committees. And that doesn’t include an explosion of late advertising funded by last-minute checks from mega-donors like Las Vegas casino owner Sheldon Adelson and Chicago media mogul Fred Eychaner, whose emergence as political forces may be the enduring legacy of 2012. Adelson and his wife gave $39.7 million to GOP-allied super PACs in the campaign’s final weeks to bring their total disclosed contributions to almost $90 million, while Eychaner gave $2 million, bringing his total to $14 million. …

“Between Oct. 18 and Nov. 26, Obama’s campaign, combined with a trio of Democratic Party committees devoted to it, raised $111 million, compared to $100 million raised by Romney’s campaign and a pair of Republican Party committees. But Romney’s committees outspent Obama’s $292 million to $258 million … And Romney’s spending advantage widened to $337 million to $279 million when taking into consideration the super PACs devoted to the rivals, the pro-Obama Priorities USA Action and the pro-Romney Restore Our Future. …

“Eychaner, an Obama bundler, in the final weeks donated $1 million to Priorities (raising to $4 million his total giving to it), and $500,000 apiece to the super PACs devoted to Democratic Senate and House candidates, Majority PAC and House Majority PAC, … (to which he’s now given a combined total of $8.3 million). Hedge funder Jim Simons in mid-October donated $1.5 million to Priorities (bringing his tally to $5 million) and $500,000 to House Majority PAC ($1.5 million total). And Houston attorney Steve Mostyn gave $1 million to Priorities, bringing the total given by him and his wife to more than $4 million.” http://politi.co/TGDsPz

POLL DU JOUR – “AP-GfK Poll: Obama approval rises postelection,” by AP’s Jennifer Agiesta: “Obama's approval rating stands at 57 percent, the highest since May 2011, when U.S. Navy SEALs killed the terror leader, and up 5 percentage points from before the election. And 42 percent say the country is on the right track, up from 35 percent in January 2009. … In October, 52 percent of Americans said they expected the economy to get better in the next year; now, that stands at 40 percent. Among Republicans, the share saying the economy will improve … has dropped sharply since before the election, from 42 percent in October to 16 percent now. … 9 in 10 Democrats say they approve of the way Obama is handling his job, compared with just 2 in 10 Republicans. That gap approaches the 82-point partisan gap in George W. Bush's approval ratings according to Gallup polling in December 2004.” http://yhoo.it/VrAI84

THE JUICE -- “What Jim DeMint tells us about Washington power,” Manu Raju and Scott Wong: “South Carolina Sen. Jim DeMint accomplished very little in the Senate in the traditional sense: He wasn’t a legislator, has no signature laws to his name and has never been part of any major bipartisan negotiations. But the fact that DeMint leaves the chamber as one of its best-known conservative senators shows how a message man relying on the outside P.R. game can become a powerhouse in his party — often with more influence than the Senate’s old bulls and their laundry list of accomplishments. … And it underscores how both parties have seen their respective caucuses grow younger and more partisan, overtaking the consensus-minded senior senators who are more inclined to compromise. …

“DeMint’s sudden announcement Thursday that he’d quit his seat in January to head the conservative Heritage Foundation shows where he thinks the real power center in his party resides. ‘I honestly think I can do a lot more on the outside than I can on the inside,’ DeMint said after delivering a speech to an enthusiastic crowd at The Heritage Foundation. It’s a striking acknowledgment for a man who was poised to ascend to the top Republican spot on the Commerce, Science and Transportation Committee in the next Congress. If he were to stay, DeMint would have a major hand rewriting the nation’s highway policy and overseeing the country’s aviation, passenger rail and telecommunications laws. But given his emphasis on messaging over legislating, the 61-year-old’s move to one of Washington’s most influential conservative think tanks after a 14-year congressional career appears to be a natural choice. … DeMint had long promised to quit after his second term, which is up in January 2017. But virtually no one knew he would resign his seat this soon. …

“Just as he has during his eight-year career in the Senate, DeMint relied on the outside conservative voices to communicate the news to his colleagues. He gave an exclusive interview to a writer for The Wall Street Journal’s conservative editorial page and conducted an interview with Rush Limbaugh before telling most of his colleagues his decision. …. [H]is critics say it was DeMint’s hard-line brand of conservatism that has narrowed the party’s tent and appeal to important voting blocs, such as Hispanics.” http://politi.co/VNO019

MEDIAWATCH -- “Ed Henry [president of the White House Correspondents’ Association]: Fox's correspondent on front lines with Obama,” by AP Television Writer David Bauder: “As a young reporter, Henry said he looked up to former White House correspondents like Sam Donaldson, famed for shouting questions at President Ronald Reagan. ‘Now if you shout a question at Obama, you're somehow seen as a bad guy,’ he said. ‘I think some people have been cowed.’

“Donaldson, now 78, recalled angry letters he had gotten from Republicans about his coverage of the Reagan administration. When he covered President Bill Clinton's second term from ABC and asked tough questions, Republicans wrote to compliment him on his maturity, he said. He had his boss' support and didn't have to look over his shoulder at blogs, said Donaldson, who considers Henry ‘one of the best’ on the beat now. ‘It's not that they are all afraid and cringe, because they don't,’ Donaldson said. ‘But it's so much tougher to do it in every way.’” Story, with pichttp://yhoo.it/YJ82Q3

DELAWARE became the first state to sign the Constitution, 225 years ago today. (hat tip: Bill Larson)

** A message from the Business Roundtable: America’s CEOs urge Washington to act now to avert the fiscal cliff. Jeffrey Immelt, Chairman and CEO of GE: “If [the fiscal cliff] does happen, that’s a failure of governance, and that’s something we shouldn’t expect.” Hear directly from other leading CEOs at www.brt.org/itstimetoact. **

Readers' Comments (2)

Your characterization of "compromise" in the first paragraph explains a lot of the trouble we're having in DC. If you tell me that compromise means "halfway between the stated positions" it means that the best strategy is to make my stated position as radical as possible, in order to pull the half-way point closer to what I actually want. It also means that if the other side *offers* a compromise, I should take their offer as their new starting position, again pulling the half-way point towards me. We've seen tons of both these behaviors.

The better approach to compromise is to find things that *both* sides want and collaborate to make them happen. There are plenty of opportunities. Both sides want tax cuts for the 98%. Both sides want entitlement reform. Both sides want tax-code reform. Both sides recognize that the debt limit must be raised. The problem is that instead of pursuing these shared goals, each side is using them as hostages for non-shared goals. "Yes, I want to cut taxes for the 98%, but I won't unless you cut them for the other 2%". "Yes, I want to reform entitlements, but I won't unless you cave on tax rates". It's this "zero sum" idea that any gains by the other side are a loss for your own, that has paralyzed our government.

When Congress passes authorization bills (the only way we accumulate debt other than interest on the borrowing to pay those authorizations) it backs those authorizations with the full faith and credit of the United States. Those authorizations become U.S. sovereign debt. In other words, the authorization bills passed by the Congress and signed into law by the President must be paid. The current Congress can not chose to not pay for the authorization bills of previous Congresses without damaging the full faith and credit of the United States.

The debt limit is not something that the President controls. It is a product of the authorization bills passed by the Congress. The President, through the Treasury, has to, by law, pay the bills incurred by the Congress. When the Congress does not allow the Treasury to pay those bills it risks putting the entire United States into default. The wrangling over authorization to pay those bills in 2011 is what caused the downgrade of the credit rating of the United States from AAA to AA+ - something previously unimaginable.

When you think of debt limit think Congress - not the President. The President is just the paymaster for the bills Congress authorizes.